nep-ent New Economics Papers
on Entrepreneurship
Issue of 2022‒01‒10
thirteen papers chosen by
Marcus Dejardin
Université de Namur

  1. Entrepreneurial Ecosystems and Regional Persistence of High Growth Firms: A 'Broken Clock' Critique By Coad, Alex; Srhoj, Stjepan
  2. On the consequences of firm growth By Freel, Mark; Gordon, Ian
  3. Innovation Performance and the Signal Effect: Evidence from a European Program By Nadine Levratto; Aurelien Quignon
  4. Private or Public Equity? The Evolving Entrepreneurial Finance Landscape By Michael Ewens; Joan Farre-Mensa
  5. The dynamics of wage dispersion between firms: The role of firm entry and exit By Schröpf, Benedikt
  6. Income loss among the self-employed: Implications for individual wellbeing and pandemic policy measures By Schneck, Stefan
  7. How institutions moderate the effect of gender diversity on firm performance By Hoch, Felix; Seyberth, Lilo
  8. The effect of the manager gender on SMEs export and import decisions: Evidence for Spain By Alfonso Expósito; Amparo Sanchis-Llopis; Juan A. Sanchis-Llopis
  9. Tracing Productivity Growth Channels in the UK By Mr. Daniel Garcia-Macia; Julia Korosteleva
  10. On the Cleansing Effect of Recessions and Government Policy: Evidence from Covid-19 By Pedro Dias Moreira; Nicholas Kozeniauskas; Cezar Santos
  11. Remittances and firm performance in sub-Saharan Africa: evidence from firm-level data By Kabinet Kaba; Mahamat Moustapha
  12. Determinantes del Emprendimiento Femenino en Europa By Calvo, Elena
  13. Der Gründungszuschuss für Arbeitslose nach der Reform 2011: Ein Erfolg wie seine Vorgänger (The New Start-Up Subsidy for the Unemployed: A success like its predecessors) By Caliendo, Marco; Tübbicke, Stefan

  1. By: Coad, Alex; Srhoj, Stjepan
    Abstract: The Entrepreneurial Ecosystems (EE) approach makes specific predictions regarding how EE inputs are converted into high-growth firms (HGFs) as an output. A simulation model draws out our hypothesis of regional persistence in HGF shares. Based on intuitions that EEs are persistent, we investigate whether regional HGF shares are persistent, using census data for 2 European countries taken separately (Croatia for 2004-2019, and Slovenia for 2008-2014). Overall, there is no clear persistence in regional HGF shares - regions with large HGF shares in one period are not necessarily likely to have large HGF shares in the following period. This is a puzzle for EE theory. In fact, there seems to be more persistence in industry-level HGF shares than for regional HGF shares. We formulate a ‘broken clock’ critique - just as a broken clock is correct twice a day, EE recommendations may sometimes be correct, but are fundamentally flawed as long as time-changing outcomes (HGF shares) are predicted using time-invariant variables (such as local universities, institutions and infrastructure).
    Keywords: High-Growth Firms, Persistence, Regional Persistence; Entrepreneurial Ecosystems; Clusters; Sectoral Systems of Innovation
    JEL: L52 L78 M21 O38
    Date: 2021–12–07
  2. By: Freel, Mark; Gordon, Ian
    Abstract: Recent contributions to the literature on small firm growth have been marked by a growing sense of frustration with the state-of-the-art and what it implicates in both theory and policy. In short, while growth events appear relatively common, a tiny proportion of firms sustain growth and ‘scale’; calling into question the very basis of policies seeking to target high growth firms (HGFs). We argue that understanding the frequency of growth events and the rarity of sustained growth requires a better understanding of growth consequences. To this end, we report case study evidence from ambitious entrepreneurs whose firms had experienced an episode of high growth followed by longer periods of mixed performance. Our goal is to shed light on how the experience of growing affects further growth. Our data provide initial insights into the mechanisms linking past growth to growth motivations and into the ways in which past growth lays the foundations for future performance.
    Keywords: firm growth, growth intention, ambidexterity, income, barriers
    JEL: L21 L25 L26
    Date: 2020–02–01
  3. By: Nadine Levratto (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Aurelien Quignon (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper seeks to estimate the effect of a European policy that subsidizes innovation investments. By carefully selecting observables, we compare recipients of the program with non-recipient firms to overcome the endogeneity of R&D grants. We conduct a difference-indifferences design on the universe of a unique firm-level dataset of European SMEs between 2008 and 2017. We find a significant effect of proof of concept grants, which implies an increase in the number of patent applications and the probability of patenting. There are positive impacts on credit financing, which suggest a signal effect to investors about the project quality of young firms.
    Keywords: Innovation,Patent,Financing constraints,H2020,R&D subsidies
    Date: 2021–12–06
  4. By: Michael Ewens; Joan Farre-Mensa
    Abstract: The U.S. entrepreneurial finance market has changed dramatically over the last two decades. Entrepreneurs raising their first round of venture capital retain 30% more equity in their firm and are more likely to control their board of directors. Late-stage startups are raising larger amounts of capital in the private markets from a growing pool of traditional and new investors. These private market changes have coincided with a sharp decline in the number of firms going public—and when firms do go public, they are older and have raised more private capital. To understand these facts, we provide a systematic description of the differences between private and public firms. Next, we review several regulatory, technological, and competitive changes affecting both startups and investors that help explain how the trade-offs between going public and staying private have changed. We conclude by listing several open research questions.
    JEL: G23 G24 G28 G34 G38
    Date: 2021–12
  5. By: Schröpf, Benedikt
    Abstract: Although wage inequality is a prominent and widely studied issue, the literature is vastly silent on the relationship between firm entry and exit and the wage dispersion between firms. Using a 50% random administrative sample of West German establishments over the period 1976-2017, I study wage dispersion dynamics between and within the groups of entering, exiting and incumbent establishments by examining the distribution of average wages across establishments. The results show that entering establishments became increasingly unequal over time, thereby contributing to the rise in the wage dispersion between establishments. However, stronger exit dynamism of young and low-wage establishments has dampened this effect. These findings suggest taking the consequences for wage inequality into consideration when designing and assessing policy instruments for firm entry and exit.
    Keywords: Firm entry,Firm exit,Wage dispersion,Firm Dynamics,Germany
    JEL: L26 M13 J31
    Date: 2021
  6. By: Schneck, Stefan
    Abstract: Due to the pandemic-induced economic crisis, self-employed individuals are currently suering considerable income losses. The self-employed and the members in their households usually form an economic unit. As a consequence, the income cuts not only aect the self-employed themselves but also the rest of their household. We used the German Socio-Economic Panel (SOEP) to calculate how much income the selfemployed are able to sacrice to achieve a subjective barely sucient household income, which we interpret as the minimum level to maintain the standard of living. Our results suggest that full-time self-employed are typically the bread-earners in their households and that, as a consequence, even moderate income losses of the self-employed often lead to problems in maintaining the living standards of their households. Conditional on individual and household characteristics, the self-employed with employees are found to live in households that are less resilient to income losses. Furthermore, a negative correlation between falling short of the barely adequate household income and wellbeing was discovered. Self-employed in households with less than adequate incomes also reported higher concerns about social cohesion. These results have implications for policy - especially in light of the economic crisis induced by the pandemic.
    Keywords: entrepreneurial households,income,income cuts,self-employment
    JEL: L26
    Date: 2021
  7. By: Hoch, Felix; Seyberth, Lilo
    Abstract: Research investigating the relationship between firm performance and gender diversity has so far reported conflicting evidence: Some studies find firm performance to benefit from gender diversity, others find negative results or no effect at all. Taking this inconclusive evidence as a sign for moderators influencing the effect of gender diversity on firm performance, we investigate the moderating influence of institutions on this relationship. Using data on 7,661 firms in 71 countries, we employ a multilevel linear regression with fixed effects to examine the moderating effect of formal as well as informal institutional characteristics. We find that institutions indeed moderate the relationship between gender diversity and firm performance. In particular, informal institutions seem to moderate the effect of diversity on market valuation (Tobin's Q), while formal institutions moderate the effect of gender diversity on firm financial performance (ROA). These results have important theoretical implications for the academic debate on gender diversity and firm performance as well as practical implications for both businesses and lawmakers.
    JEL: J16 J71 L25 M12 M14
    Date: 2021
  8. By: Alfonso Expósito ((University of Málaga, Spain) ORCID number: 0000-0002-9248-4879); Amparo Sanchis-Llopis ((University of Valencia and ERICES, Spain) ORCID number: 0000-0002-0872-7859); Juan A. Sanchis-Llopis ((University of Valencia and ERICES, Spain) ORCID number: 0000-0001-9664-4668)
    Abstract: Using a sample of 1,405 Spanish businesses, this paper explores the role of manager gender in SMEs’ decisions to get involved in exporting and importing activities. We borrow insights from international entrepreneurship theories and feminist theories to set testable hypotheses regarding how managerial gender and entrepreneurial orientation (proactiveness, risk-taking and innovativeness) may influence SMEs export and import propensities. Using a bivariate probit model and controlling for other managerial and business characteristics, results indicate that there are not significant differences in exporting propensities between male- and female-led businesses. However, female-led SMEs show a lower importing propensity, as compared to male-led counterparts. In addition, the three dimensions of entrepreneurial orientation (proactiveness, risk-taking and innovativeness) are important drivers for participating in overseas markets, and do not depend upon the manager gender. The role of managers gender in SMEs importing activities has not been investigated so far, and this is the main contribution of our research.
    Keywords: Manager gender; entrepreneurial orientation; small and medium-enterprises; exporting and importing; bivariate probit model.
    JEL: C35 J16 F14 M21
    Date: 2021–12
  9. By: Mr. Daniel Garcia-Macia; Julia Korosteleva
    Abstract: What drove the UK productivity slowdown post-GFC, and how is the post-Covid recovery expected to differ? This paper traces the sources of TFP growth in the UK over the last two decades through the lens of a structural model of innovation, using registry data on the universe of firms. The dominant innovation source in the pre-GFC decade were improvements by incumbent firms on their own products, whereas creation of new varieties by entrants took a leading role post-GFC. In the Covid recovery, survey data suggests that creative destruction (i.e., innovation replacing other firms’ products) is expected to gain importance. This emphasizes the need for growth policies that facilitate labor and capital reallocation across firms, in addition to R&D support.
    Keywords: economic growth, innovation, creative destruction
    Date: 2021–11–12
  10. By: Pedro Dias Moreira; Nicholas Kozeniauskas; Cezar Santos
    Abstract: Recessions can have a cleansing effect by encouraging the reallocation of resources from lowproductivity firms towards higher-productivity ones. Whether this effect actually occurs is still debated. We contribute to answering this question by providing new evidence. Using a survey of firms matched with administrative data, we trace out the Covid-19 recession’s effects across the productivity distribution. Higher-productivity firms are found to have been more successful at maintaining employment, but there was not a rise in exit amongst lower-productivity firms. In line with the theory that support policies offset the cleansing effect of recessions, highproductivity firms are also found to have been less likely to take up government support.
    JEL: D22 E24 H81
    Date: 2021
  11. By: Kabinet Kaba (CERDI, University Clermont Auvergne); Mahamat Moustapha (Paris Dauphine University-PSL)
    Abstract: Sub-Saharan African firms face enormous obstacles to their development. The main constraints to business performance identified are poor access to finance and a weak domestic market. In this paper, we examine how international remittances affect firms’ performance. Specifically, we investigate the role of remittances on capital accumulation, sales, and employment in 34,010 f irms operating in 42 Sub-Saharan African countries between 2006 and 2020. Using a fixed-effect instrumental variable approach to control for the endogeneity of remittances, we find that international remittances positively affect the share of capital held by nationals in manufacturing firms. Moreover, international remittances positively affect sales in non-manufacturing firms, while a negative effect on the sales of manufacturing firms is observed. Regarding the effect of remittances on employment, we find a positive impact on both manufacturing and non-manufacturing f irms. Heterogeneity tests suggest that the effect of remittances on firms’ performance is larger in less financially developed and non-resource-rich countries. As for the negative impact of remittances on sales in manufacturing firms, the results show that it is entirely due to small firms. Finally, using remittances per capita instead of remittances relative to GDP, similar result are found.
    Keywords: Remittances, Firm Performance, Entrepreneurship, Saving and Capital Investment, Firm Employment, Africa
    JEL: F24 L25 L26 M51 O16 O55
    Date: 2021–12
  12. By: Calvo, Elena
    Abstract: El presente trabajo tiene como foco estudiar los determinantes del emprendimiento femenino en Europa. Concretamente, se aspira a cuantificar el efecto que una serie de variables demográficas, económicas y socioculturales tienen sobre la decisión de emprender de hombres y mujeres. Para ello, hemos tomado datos para el periodo 2001-2016 de la base de datos GEM 2014 y desarrollado un modelo de regresión logística. Los datos revelan que los hombres tienden a emprender más que las mujeres en los países desarrollados y que las variables que influyen en su decisión difieren entre ellos. Se pone de manifiesto la importancia de las variables subjetivas o de “percepción” como determinantes del emprendimiento de hombres y mujeres.
    Keywords: Emprendimiento femenino, Europa, desigualdad de género, mercado laboral.
    JEL: J14 L26 M21 O57
    Date: 2021–12–16
  13. By: Caliendo, Marco (Univ. Potsdam ; IAB); Tübbicke, Stefan (Institute for Employment Research (IAB), Nuremberg, Germany)
    Abstract: "This study summarizes available evidence on the New Start-Up Subsidy (NSUS, “Gründungszuschuss”) for the unemployed in Germany. Subsidized founders show high survival rates in self-employment and some additional job creation. Causal analyses reveal large positive impacts on founders’ labor market outcomes as well as job satisfaction but negative effects on social security. These findings suggest increasing the number of subsidized start-ups through the NSUS and strengthening ties of its founders with the social security system." (Author's abstract, IAB-Doku) ((en))
    Date: 2021–12–21

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